In North Carolina, the Planned Community Act governs homeowners associations established since 1999.
There’s no oversight agency governing the thousands of HOA boards in the state, but here’s what state law says about common questions.
Can an HOA foreclose on my home?
Yes, homeowners associations can place a lien on a property when bills are 30 days overdue. They can foreclose on that lien — even if there’s an existing mortgage — and the process can move startlingly quickly.
“The problem is that HOAs have this kind of heightened ability to foreclose that’s stronger than a traditional lender has. I mean, they go through fewer hoops to get there,” said Jim White, an attorney based in Chapel Hill. “I’ve had multiple clients who did not get notices in HOA foreclosures. I’ve rarely encountered that in a traditional mortgage foreclosure.”
White said this can leave homeowners vulnerable to scams. He helped represent a group of North Carolina homeowners who together won nearly $1.3 million in federal court in June from a company that was fixing bids ahead of foreclosure sales and attempting to extort cash from homeowners. One of the plaintiffs in that case made a miscalculation that White said is all too common — getting behind with the HOA instead of the bank, when banks are far more likely to work with their clients to avoid foreclosure when possible.
“Things got tight and so he wanted to make sure he didn’t miss his mortgage payments because he didn’t want to lose his house. He was thinking the HOA is not that much money. He could always catch it up,” White explained. “He made exactly the wrong calculation.”
A bankruptcy claim stops the foreclosure process as long as it’s filed before the sale.
Can HOAs control what color I paint my house?
Yes. HOAs have broad power to write bylaws that require residents to seek approval for any architectural changes. This can include paint colors, additions, sheds, roof shingle colors, landscaping or whatever else is written into the bylaws.
Be sure to read them closely.
Can an HOA ban flags or political signs?
HOAs have the power to restrict signs.
When it comes to political signs, North Carolina law was updated in 2005 to say that associations may only ban them if the first page of the covenant states in bold and all-caps: “This document regulates or prohibits the display of political signs. ”
Even still, if the local government doesn’t regulate political signs on residential property, the statute says in the weeks around an election, HOAs should permit at least one sign measuring up to 24 inches on either side. Political signs can be prohibited 45 days before and seven days after an election.
HOAs cannot prohibit the display of standard-size U.S. and state flags.
Can an HOA prevent me from installing solar panels?
A recent North Carolina Supreme Court decision helped affirm homeowners’ rights to install solar panels.
The case centered around a Raleigh family who spent $32,000 to install solar panels on the roof of their home in northeast Raleigh, sparking a fight with their HOA, the Belmont Association.
The Belmont Association sent the couple notice of an architectural violation a few months after the solar panels went up in 2018 and denied the application and appeals they later submitted, citing “aesthetic problems.”
The HOA suggested moving the panels to a part of the house not visible from the road, which the family argued would result in them getting far less light, rendering them useless.
In the meantime, the HOA began fining them $50 a day.
The N.C. Supreme Court was split 4-3, but ultimately ruled in June that requiring the solar panels be out of view would “have the effect” of prohibiting them, which a 2007 statute protects against.
“North Carolinians must be able to use clean energy alternatives to power their lives and protect our environment,” Attorney General Josh Stein tweeted, lauding the decision. His office had filed a brief in support of the homeowners.
The statute covers townhomes, but not condos where there are units on multiple floors.
How to change your HOA’s rules
If there’s something in the HOA bylaws worth a second look, neighbors can work together to change them.
It’s rarely easy, however. HOAs can require changes be agreed to by 67% of all property owners, meaning lack of participation can constitute a “no” vote.
State law requires at least one meeting of the executive board a year, where residents must be allowed to speak about their issues and concerns.
If you’re thinking about getting rid of your HOA altogether, the battle becomes even tougher. Eighty percent of property owners must be in favor of disbanding.
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